Target 720p? No. Just no.
Don't get technical at the definition of "outdated". You know you're talking beside the point. I'm comparing between a console released between 2005 and one in 2012. That's a big gap of time.
The "it's in line with what's currently available" line is a very weak argument. You know the current consoles are on their way out, and 6 year old hardware is generally seen as outdated. It's not "fine" to release hardware in 2012 that's marginally better than 2005 hardware unless they're going again for the "a generation behind" strategy with the Wii.
You're in for a very rude awakening next generation, sir. 1080p will not be the target for many of the games. We are barely reaching 720p native. Halo 4 is touting that they will be 720p native...6 years into this generation. At least in the first 3 or so years, 1080p will not be target. Bet.